This article was downloaded by: 10.3.98.104 On: 03 Oct 2021 Access details: subscription number Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: 5 Howick Place, London SW1P 1WG, UK Routledge Handbook of Corruption in Asia Ting Gong, Ian Scott Corruption Networks in China Publication details https://www.routledgehandbooks.com/doi/10.4324/9781315716732.ch3 Jiangnan Zhu Published online on: 05 Dec 2016 How to cite :- Jiangnan Zhu. 05 Dec 2016, Corruption Networks in China from: Routledge Handbook of Corruption in Asia Routledge Accessed on: 03 Oct 2021 https://www.routledgehandbooks.com/doi/10.4324/9781315716732.ch3 PLEASE SCROLL DOWN FOR DOCUMENT Full terms and conditions of use: https://www.routledgehandbooks.com/legal-notices/terms This Document PDF may be used for research, teaching and private study purposes. Any substantial or systematic reproductions, re-distribution, re-selling, loan or sub-licensing, systematic supply or distribution in any form to anyone is expressly forbidden. The publisher does not give any warranty express or implied or make any representation that the contents will be complete or accurate or up to date. The publisher shall not be liable for an loss, actions, claims, proceedings, demand or costs or damages whatsoever or howsoever caused arising directly or indirectly in connection with or arising out of the use of this material. 3 CORRUPTION NETWORKS IN CHINA An institutional Analysis Jiangnan Zhu Introduction Rapid economic growth provides opportunities for institutionalising new forms of cor- ruption and for re-enforcing existing networks of wealth extraction and illicit activities (Rose-Ackerman 1999). In China, since the late 1990s, there is evidence that economic growth has been accompanied by corruption of increasing severity, complexity, and scope (Gong 1997; Wedeman 2004; Guo 2008). One indication of this intensication of corrup- tion is the high incidence of collective corruption in which a complex network of partic- ipants from dierent government departments, localities, and private sectors operate like a syndicate. These corrupt networks have in some cases developed into corruption on a grand scale involving very high-level ocials and the establishment of corrupt empires. The chapter identies three major politico-economic features leading to this form of corruption in China: • power concentration in a geographically and functionally fragmented authoritarian regime; • business-government collusion in a transitional economy; and • the prevalence of informal politics, especially the factional networks within the ruling party and the privatisation of public power by family members of government ocials. These features are illustrated using the case of a former member of the Politburo Standing Committee (PSC) of the Chinese Communist Party (CCP), Zhou Yongkang, who is to date the highest ocial ever convicted of corruption. Corruption in China: denitions and trends Corruption in China is broadly dened. In addition to monetary activities such as bribery or embezzlement, a corrupt ocial is almost always vilied for personal failings such as having mistresses, committing adultery (a term appearing in the ocial media since 2014), neglect- ing duty, or even leaking state secrets. Corruption in China seems to be, on the one hand, similar to the generic denition of “abuse of public power for private gain” but, on the other, 27 Downloaded By: 10.3.98.104 At: 01:40 03 Oct 2021; For: 9781315716732, chapter3, 10.4324/9781315716732.ch3 Jiangnan Zhu rather more than that in the context of the public interest and the role of the party. First, although the major actors in Chinese corruption are government ocials, the sta of public organizations and even ordinary people engaged in public services may also be considered to commit corruption if their misbehaviour compromises public interests (Ko and Weng 2011). Second, corruption in China is subject to both criminal law and party discipline. The crimi- nal law regulates not only economic corruption, such as bribery, graft, embezzlement, misap- propriation, holding a huge amount of property with unidentied sources, and unauthorised disposal of state properties but also the dereliction of duties and malpractices. Party discipline holds to high formal moral standards and castigates misconduct caused by violation of admin- istrative responsibility and ocial malfeasance such as shirking, torture, having mistresses, squandering and many other forms of immorality. This broad denition of corruption reects the CCP’s attempts to control both typical types of corruption and the socially unacceptable behaviour of state functionaries. However, broad denitions do not necessarily correlate with low tolerance of corruption or help in eorts to constrain it (Gong and Wang 2013). Several scholars argue that corruption in China increased in the late 1990s and can be gauged by the rising percentage of major cases led, the number of senior ocials charged, and the growing amounts of corrupt funds uncovered. For instance, major cases led by the disciplinary inspection system, which involved ocials at or above county/department level (xian/ke) and illicit monies exceeding 10,000 yuan, jumped from approximately 6 per cent in 1987–1988 to more than 30 per cent in 2000 (Wedeman 2004). The average amount of money involved in those cases rose dramatically from 17,000 yuan between 1978 and 1991 to 2,968,000 yuan between 1991 and 2000 and increased further to 3,208,000 by 2004. After 2001, 78.6 per cent of major cases exceeded one million yuan (Guo 2008). Signi- cantly, high-level ocials, especially those at or above bureau-level (chu, ting, ju), accounted for 64 per cent of the major actors among publicly reported cases (Gong and Wu 2012). Concentrating particularly on trends in high-prole corruption, I compiled a dataset from available public sources, including government publications, websites, and media re- ports of senior ocials at or above vice-provincial/ministerial level who were charged or punished for corruption between 1986 and June 2015. Because cases involving those very high-level ocials have political importance, the mass media always report them. Thus, this dataset of some 275 ocials should be an almost complete list of senior ocials accused of corruption since 1986. Figure 3.1 illustrates the distribution of these ocials over time. It shows a steadily increasing number of senior ocials charged with corruption. Between 1986 and 1994, corrupt senior ocials only appeared sporadically and in very small numbers. From 1995 onwards, corrupt senior ocials began to show up in consecutive years and in several years the number reached double digits. After 2013, 126 ocials were investigated for corruption, accounting for 46 per cent of the whole dataset. The large number after 2013 is apparently the result of the large scale anti-corruption campaign launched by President Xi Jinping after he came to power at the end of 2012. However, many newly investigated o- cials were involved in corruption long before that. For example, although the former mayor of Nanjing, Ji Jianye, was only arrested in early 2015, he had been engaged in corrupt activ- ities since 1992 when he was only a county party secretary. The dataset also shows that, after 2005, the average amount of illicit money purloined was constantly more than 50 million yuan with the highest amount reaching 200 million yuan. Underlying these numbers are constantly changing forms of corruption with increasingly sophisticated causes and characteristics, reecting the changing social environment (Gong 1997, 2002). In the 1980s, the most popular form of corruption was ocial speculation, tak- ing advantage of the dual-price system between the low state-set prices and the much higher 28 Downloaded By: 10.3.98.104 At: 01:40 03 Oct 2021; For: 9781315716732, chapter3, 10.4324/9781315716732.ch3 Corruption networks in China 80 71 70 60 50 40 35 30 20 20 15 12 10 11 10 8 9 8 9 8 10 6 6 7 6 4 2 2 33 33 1 0 1 0 11 0 e Figure 3.1 Number of disciplined vice-provincial/ministerial-level ocials, 1986-June 2015 Source: Based on the author’s dataset of 275 senior ocials drawn from cases reported in the Chinese press. market prices for raw materials. In the 1990s, when the state further liberalised the prices and carried out taxation, banking, and housing reforms, many new corrupt activities appeared (Gong 1997). While stock market violations, speculation in the burgeoning real estate mar- kets, and smuggling tended to be more frequent in the economically active coastal regions, tax evasion, nancial fraud, and buying and selling ocial positions were more common types of corruption in less-developed areas (Sun 2004; Zhu 2008, 2012). Government pro- curement and outsourcing of services were also plagued with high incidences of corruption (Gong and Wu 2012). Since the late 1990s, collective corruption, in which groups of ocials working collab- oratively like a maa, has been particularly noticeable (Gong 2002). Although some cases, such as collective embezzlement, only involve government ocials, most collective corrup- tion includes complex corrupt networks, which transfer interests among ocials in dierent local bureaucratic systems and to actors outside the government (Gong 2002). For instance, in the notorious Yuanhua smuggling case investigated in the late 1990s, Lai Changxing, the boss of a smuggling empire in Xiamen suborned the entire custom house in Xiamen and cultivated the support of public security ocials, local leaders, banks and even the military in Xiamen and in other parts of the country (Shieh 2005). Similar cases were also discovered in Zhanjiang and Shenyang. More recently, the former head of the Chongqing public security bureau, Wen Qiang, together with his local policemen, acted as the unlawful protectors of the criminal underworld in Chongqing (Wang 2013). In these cases, the major players in the criminal networks included private entrepreneurs, state-owned enterprise (SOE) managers, gangsters, local governors, party leaders, bureaucrats, and law enforcers.